[Federal Register Volume 65, Number 64 (Monday, April 3, 2000)]
[Proposed Rules]
[Pages 17458-17471]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8052]


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FEDERAL HOUSING FINANCE BOARD

12 CFR Part 915

[No. 2000-12]
RIN 3069-AB00


Election of Federal Home Loan Bank Directors

AGENCY: Federal Housing Finance Board.

ACTION: Proposed rule.

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SUMMARY: The Federal Housing Finance Board (Finance Board) is proposing 
to amend its regulations to address the status of the 1999 and 2000 
elections of directors at each Federal Home Loan Bank (Bank), and to 
provide standards regarding the manner in which the Banks must stagger 
their boards. The proposed rule also would address the consequences to 
an incumbent director whose directorship is eliminated or is 
redesignated as representing Bank members located in a different state 
before the end of his or her term.

EFFECTIVE DATE: The Finance Board will accept written comments on the 
rule until May 3, 2000.

FOR FURTHER INFORMATION CONTACT: Neil R. Crowley, Deputy General 
Counsel, (202) 408-2990, Federal Housing Finance Board, 1777 F Street, 
N.W., Washington, D.C. 20006.

SUPPLEMENTARY INFORMATION:

I. Background

    During 1999, each Bank conducted elections in which the members 
voted to elect approximately one-half of the elected directors of the 
Bank. The directors-elect were to have assumed office for two-year 
terms, commencing on January 1, 2000. On November 12, 1999, the Gramm-
Leach-Bliley Act, Pub. Law No. 106-102, 133 Stat. 1338, 1453 (Nov. 12, 
1999) (GLB Act), became law, amending Section 7(d) of the Federal Home 
Loan Bank Act (Bank Act) to establish 3-year terms for all Bank 
directors. 12 U.S.C. 1427(d), as amended. Because the GLB Act 
amendments became law upon enactment, they had the effect of extending 
the two-year terms of all incumbent elected directors by one year.\1\ 
Thus, on January 1, 2000, there were no open directorships for the 
directors-elect to fill, and those individuals did not assume office on 
that date.
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    \1\ See Finance Board Resolution No. 99-65 (Dec. 14, 1999). The 
GLB Act also had the effect of shortening the terms of all sitting 
appointed directors from four years to three years. An express 
transition provision in an earlier version of H.R. 10, which would 
have mandated that the new 3-year terms take effect with the first 
post-enactment elections, was not carried over into the GLB Act. 
H.R. 10, Sec. 164(d), 105th Cong., 2d Sess. (May 13, 1998) (as 
passed by the House of Representatives).
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    In previously addressing the effect of the GLB Act on the terms of 
Bank directorships, the Finance Board expressed its intent to authorize 
the board of directors of each Bank to decide whether to conduct new 
elections in 2000 or to adopt the tabulation of votes cast in the 1999 
elections for use in the 2000 elections. Finance Board Resolution No. 
99-65 (Dec. 14, 1999). The Finance Board indicated that it subsequently 
would establish the criteria by which the board of each Bank could make 
that decision, which is one issue addressed in this proposed 
rulemaking.
    The GLB Act also provides that the Finance Board and the board of 
directors of each Bank shall adjust the term of any director first 
appointed or elected after enactment of the GLB Act, as necessary to 
cause the board of each Bank to be staggered into three approximately 
equal classes. 12 U.S.C. 1427(d), as amended. The GLB Act, however, 
imposed the staggering requirement without amending existing law, under 
which the directorships of the Banks are allocated among the states 
based in part on the amount of Bank stock held by the members located 
in each state and in part on the number of directorships designated to 
each state in

[[Page 17459]]

1960. Under the existing provisions, it is possible for a directorship 
to be redesignated mid-term to represent the members located in another 
state. It is also possible that the annual designation of directorships 
might reduce the number of directorships allocated to a particular 
state, thus causing a directorship to disappear altogether. The 
proposed rule includes provisions that are intended to maintain a 
staggered board notwithstanding the possibility that over time one or 
more directorships might be eliminated. The proposed rule also would 
address the consequences to an incumbent director if his or her seat is 
eliminated or is redesignated mid-term to represent members located in 
another state.

II. State-Based Directorships

    Section 7(b) of the Bank Act requires that the Finance Board 
designate ``[e]ach elective directorship * * * as representing the 
members located in a particular State'' and provides that the seat 
``shall be filled by a person who is an officer or director of a member 
located in that State.'' 12 U.S.C. 1427(b) (1994). Section 7(c) of the 
Bank Act requires that the designation of directorships ``be determined 
* * * in the approximate ratio of the percentage of the * * * stock 
[required to be held by] * * * the members located in * * * [a 
particular] State at the end of the * * * [prior year] to the total 
required stock * * * of all members of such bank at the end of such 
year.'' 12 U.S.C. 1427(c) (1994). Under the stock-based allocation 
formula, each state must be allocated at least one directorship, but no 
state can be allocated more than six directorships. Section 7(c) also 
includes a ``grandfather provision,'' however, under which each state 
may not be allocated fewer directorships than were allocated to it as 
of December 31, 1960, without regard to the amount of Bank stock 
currently held by the members in that state. The effect of the 
grandfather provision is that the members in 20 states are entitled to 
a minimum number of directorships that ranges from two to six seats per 
state. See 12 CFR 915.15 (listing the states with more than one 
grandfathered directorship).
    The stock-based designation of the elective directorships is done 
annually. Because the allocation of directorships depends on the amount 
of Bank stock held by the members located in each state, the state to 
which a directorship is designated can change from one year to the next 
as the relative stockholdings of the members change. Because the 
constituency of a directorship could ``migrate'' to another state as a 
result of a redesignation, the incumbent would no longer be an officer 
or director of a member located in the designated state, as is required 
by Section 7(b), and thus would become ineligible to remain in office 
as a result of the redesignation. If such a redesignation were to occur 
mid-term, the board of directors of the Bank would be required to fill 
the resulting vacancy for the remainder of the unexpired term with an 
eligible successor, i.e., an officer or director of a member located in 
the newly-designated state, pursuant to Section 7(f) of the Bank Act. 
12 U.S.C. 1427(f) (1994).
    Apart from the possibility that a given directorship may be 
redesignated to another state, it is possible that an elected 
directorship could disappear entirely as a result of a shift in the 
relative amounts of Bank stock held by the members located in different 
states. For example, in the New York Bank district an allocation of 
directorships based solely on the relative stockholdings of the members 
in New York and New Jersey at the end of 1998 would have resulted in 
the designation of six directorships to New York and two directorships 
to New Jersey. Because of the grandfather provision, however, the 
Finance Board cannot allocate fewer than four directorships to the New 
Jersey members, which results in four directorships being designated to 
New Jersey and six directorships being designated to New York. The 
members located in New York also are entitled to four seats under the 
grandfather provision. Thus, the fifth and sixth directorships that 
currently are designated to New York would continue to be designated to 
New York only if the relative amounts of Bank stock held by the members 
in each state remains unchanged in subsequent years.
    If the amount of stock held by the New York members were to 
decrease sufficiently, the stock-based allocation might result in the 
New York members being allocated only five directorships, rather than 
their current six seats, with the New Jersey members being allocated 
three directorships. Although the grandfather provision again would 
result in New Jersey being allocated four seats, there no longer would 
be any basis for the New York members to retain the sixth directorship, 
which would be eliminated. There are at present nine states in eight of 
the Banks that are allocated one or more directorships in excess of the 
number guaranteed by the grandfather provision in which a directorship 
could be eliminated as a result of such a scenario.
    Separately, Section 7(a) of the Bank Act allows the Finance Board 
to create additional elected directorships--``discretionary 
directorships''--for any Bank in which the district includes five or 
more states. 12 U.S.C. 1427(a), as amended. There are five such Bank 
districts: Boston, Atlanta, Dallas, Des Moines, and Seattle. The 
Finance Board has established a total of five discretionary seats for 
four of those Banks, which are designated to the following states: 
Massachusetts (1), North Carolina (1), Missouri (1), and Washington 
(2). The designation of those discretionary directorships is done at 
the same time as the annual designation of directorships, but is not 
dependent on the amount of Bank stock held by the members in a 
particular state, or on any other factor. The existence of the 
additional elected directorships created pursuant to Section 7(a) is 
purely a matter of discretion for the Finance Board.
    In addition, for any Bank district in which the Finance Board has 
established a discretionary elected directorship pursuant to Section 
7(a), the Bank Act authorizes the Finance Board to establish a limited 
number of discretionary appointed directorships. The Finance Board has 
established a total of seven discretionary appointed directorships in 
the four districts that have discretionary elected seats: Boston (2), 
Atlanta (1), Des Moines (2), and Seattle (2). The authority to create a 
discretionary appointed directorship exists only if the Finance Board 
has exercised its discretion under Section 7(a) to create discretionary 
elected directorships. Thus, if the Finance Board were to eliminate the 
existing discretionary elected directorships, the discretionary 
appointed directorships would cease to exist at the same time. If the 
Finance Board were to eliminate all of the discretionary elected 
directorships that it has established, each of the four Banks noted 
above could lose a total of between two and four directorships at once.
    Because of the possibility that a Bank might lose a number of 
directorships under one or more of the above provisions, the boards of 
the Banks could become un-staggered over time regardless of the GLB 
Act, particularly if all directorships are lost from the same class. 
Because the GLB Act authorizes the adjustment only of the terms of the 
persons first appointed or elected after enactment, once the initial 
staggering is accomplished it is not clear that either the Banks or the 
Finance Board would be authorized subsequently to adjust the terms of 
the remaining directors, even if only to ``re-stagger'' a board that 
has become un-staggered due to a loss of directorships. The Finance 
Board believes that it is

[[Page 17460]]

unlikely that the GLB Act intended only that the boards of the Banks be 
staggered initially without any consideration being given to how the 
appropriate staggering might be maintained into the future. The Finance 
Board believes that by requiring each Bank's core of ``guaranteed'' 
directorships, i.e., those authorized by the one-seat per state minimum 
and the grandfather provisions of Section 7(c), to be separately 
staggered the proposed rule would best ensure that the staggering 
required by the GLB Act will continue into the future without the risk 
that the loss of some directorships would upset the initially staggered 
board structure.

III. Description of the Proposed Rule

A. The 2000 Election

    The first issue addressed by this proposed rule concerns the manner 
in which the members of each Bank are to elect successors to those 
directors whose terms will expire on December 31, 2000. The proposed 
rule generally would allow the board of directors of each Bank two 
alternatives: (i) conduct new elections during the year 2000 for all 
states for which an elected directorship is to commence on January 1, 
2001, or (ii) adopt the results of the balloting from the 1999 
elections for any state that qualifies under the requirements of this 
proposed rule, and conduct new elections only in those states for which 
the proposed rule would require a new election to be held. In either 
case, the designation of directorships conducted by the Finance Board 
in 2000 is to control as to the number of directorships to be allocated 
to the individual states.
    Before a Bank could decide which alternative to adopt, it would 
have to comply with two requirements in the proposed rule that are 
procedural in nature. First, the board of directors of each Bank would 
have to wait until after receiving from the Finance Board the annual 
designation of directorships among the states within the Bank's 
district, in accordance with Sec. 915.3(b). Second, the board would 
have to determine which states are to be assigned reduced terms in 
order to implement the staggering provisions of the GLB Act and this 
proposed rule, as described below.
    By regulation, the Finance Board must complete the annual 
designation of directorships and notify the Banks of the results no 
later than June 1 of each year. Because the allocation of directorships 
might vary from year to year, the boards of the Banks cannot know 
whether the designation of directorships occurring in 2000 will be the 
same as the designation done in 1999. Mergers, acquisitions, and 
interstate relocations occurring during 1999, as well as the repeal by 
the GLB Act of Section 10(e) of the Bank Act (which imposes certain 
capital-based sanctions on non-qualified thrift lender members), could 
cause the 2000 designation of directorships to allocate a greater or 
lesser number of seats to particular states than were allocated to 
those states in 1999. The proposed rule would provide that the 
designation of directorships to be provided by the Finance Board in 
2000 would be controlling with respect to the states to which the 
directorships are to be assigned. To avoid the possibility that the 
Banks might have to revisit the issue yet again if they were to ratify 
the 1999 election results before knowing whether the designations in 
2000 had changed, the Finance Board believes that it would be 
appropriate for the Banks to await the results of the next annual 
designation of directorships before deciding how to proceed with the 
2000 elections.
    The second provision would apply only to those Banks whose boards 
of directors must decide which of two or more states is to be assigned 
a directorship with a shortened term. In order to create the third 
class of directorships required by the GLB Act, certain directorships 
must be assigned shortened terms in connection with the next two 
elections. Where the board of directors of a Bank is required to choose 
among several different states in assigning the shortened term, the 
proposed rule would require that the board make that determination 
before considering how to proceed with the 2000 election of directors. 
For example, the Atlanta Bank has one class of four elected 
directorships with terms commencing on January 1, 2001, in which each 
directorship represents a different state. It also has a second class 
of five elected directorships with terms commencing on January 1, 2002, 
in which four of the directorships represent different states. For each 
class, the board of the Atlanta Bank would be required to assign to one 
state a term of less than three years, and the proposed rule would 
require the board to make that assignment for both classes before 
determining how to conduct the 2000 election. The Finance Board 
believes that the better approach would be for this determination to be 
made at the outset, so that individuals running for the directorship 
from the affected states will know beforehand that they will not be 
serving a full three-year term.
    As to the election, although the Finance Board intends to vest the 
decision regarding the method of selecting directors whose terms will 
commence on January 1, 2001 with the board of directors of each Bank, 
the proposed rule would require the Banks to conduct new elections in 
one case. If the designation of directorships conducted in 2000 were to 
result in a state being allocated a number of directorships that is 
greater than the number of nominees from that state in the 1999 
election, then the Bank would be required to conduct an election in 
that state. For example, in the 1999 election the Finance Board had 
designated one directorship to the members in the state of Rhode 
Island, and there was only one candidate for that directorship. If the 
2000 designation of directorships were to result in Rhode Island being 
allocated two elected directorships, the proposed rule would require 
the Boston Bank to conduct a new election in 2000 for both of the Rhode 
Island directorships. The requirement to conduct a new election in 
Rhode Island would apply on a state-by-state basis; it would not, for 
example, require that the Bank conduct a new election in any other 
states. In this example, had there been additional nominees for the 
Rhode Island directorship in the 1999 election, the board of directors 
would not be required to conduct a new election, but could declare 
elected the nominee who had received the next highest number of votes, 
assuming he or she remained eligible to serve.
    If the proposed rule would not require a Bank to conduct a new 
election for a particular state, the board of directors of the Bank 
could decide whether to do so. If the board were to determine that the 
Bank should conduct new elections in 2000, the Bank would be required 
to conduct elections for every state for which a directorship is to 
commence on January 1, 2001, in accordance with the 2000 designation of 
directorships. In most instances, that would mean that the Bank would 
conduct elections in all states in which it conducted an election in 
1999. The language also would require an election to be held for any 
other states for which an election may be required by the 2000 
designation of directorships, and would require that no election be 
held in any state for which the Bank held an election in 1999 if none 
were required by the 2000 designations. If the board of directors of a 
Bank were to require new elections, the Bank would follow the normal 
procedures for conducting an election, in accordance with Part 915 of 
the Finance Board regulations, and the 1999 election results would be 
given no effect.

[[Page 17461]]

    If a Bank would not be required to conduct new elections and its 
board of directors did not opt to do so, the proposed rule would allow 
the board to adopt the votes cast by the members in 1999 as the basis 
for electing the directors who are to commence their terms on January 
1, 2001. The proposed rule would require that the use of the 1999 
elections results be consistent with the 2000 designation of 
directorships and that there be sufficient eligible nominees remaining 
from the 1999 elections available to fill the designated seats. The 
board of each Bank would be required to confirm, on a state-by-state 
basis, that the use of the 1999 election results would be permissible, 
i.e., that this rule does not require that a new election be held for a 
particular state, and that the nominees remain eligible.
    If the 2000 designation of directorships among the states proves to 
be the same as the 1999 designation of directorships, then the proposed 
rule would allow the board of directors of a Bank to ratify the results 
of the 1999 election, subject to confirming the eligibility of the 
directors-elect to serve. If the 2000 designation of directorships were 
to differ from the 1999 designation, the board of directors still would 
be able to ratify the results of the 1999 elections, provided that 
doing so would be consistent with the 2000 designations of 
directorships. For example, if the number of eligible nominees 
remaining from the 1999 election for a particular state were to equal 
or exceed the number of directorships allocated to that state in 2000, 
the board of directors would be able to adopt the 1999 election results 
to fill the directorships designated to that state in 2000. In that 
case, the board would follow the normal elections procedure of 
declaring elected the nominee who received the greatest number of votes 
in the 1999 election, as well as each successive nominee until all of 
the directorships designated to that state have been filled.
    If the number of directorships designated to a state in 2000 were 
to be less than the number of directorships designated to that state in 
1999, the proposed rule would allow the board of directors to declare 
elected only the number of nominees that is required to fill all seats 
open under the 2000 designation. Thus, if a state in which three 
directorships were to be filled in the 1999 election were allocated 
only two directorships in the 2000 designation of directorships, only 
the two nominees from that state receiving the most votes would be 
declared elected. Similarly, if the number of directorships designated 
to a state in 2000 is greater than the number of directorships 
designated to that state in 1999, the board would declare elected 
however many nominees from the 1999 election as are required to fill 
all of the seats allocated to that state under the 2000 designation. 
Thus, if a state in which two directorships were to be filled in 1999 
were allocated three directorships in 2000, and there were other 
nominees who were not elected in 1999, the board of directors could 
declare the nominee who received the next highest number of votes 
elected to the newly created seat.
    If the board of directors were to ratify the 1999 election results, 
the proposed rule would require it to notify the Finance Board, the 
directors-elect, and each member in the affected state. The notice also 
would be required to indicate which, if any, terms have been adjusted 
in order to achieve the staggering required by the GLB Act. This 
requirement would apply to any directorship with a reduced term. Any 
such term adjustments must comply with Sec. 915.17 of the proposed 
rule, described below, which addresses staggering the board of 
directors.

B. Staggering the Terms of Office

    The GLB Act imposed what appears to be a straightforward 
requirement that the board of directors of each Bank be staggered into 
three approximately equal classes, i.e., it requires a ``class-based'' 
directorship structure for the Banks. Implementing that requirement, 
however, is not quite so straightforward because the GLB Act also 
retained the provisions of current law that require that the Banks have 
a ``state-based'' directorship structure. To some degree, a ``class-
based'' structure and a ``state-based'' structure are in conflict. For 
example, the Banks cannot have and maintain a pure ``class-based'' 
staggered directorship structure if other provisions of the Bank Act 
allow for the possibility that a certain number of directorships may 
disappear from a given class as a result of shifting stock ownership or 
at the discretion of the Finance Board. Similarly, the Banks cannot 
maintain a viable ``state-based'' directorship structure if the 
creation, elimination, and redesignation of directorships that are 
necessary consequences of a system that assigns directorships based on 
relative stock ownership among the states are constrained by other 
provisions of the Bank Act that require the maintenance of a strict 
class structure. The proposed rule attempts to strike a balance between 
the two directorship structures by focusing on each Bank's core of 
``guaranteed'' directorships, i.e., those that are guaranteed to a 
particular state by statute, and ensuring that they remain staggered 
even if a certain number of the ``non-guaranteed'' directorships are 
eliminated in the future.
Guaranteed Directorships
    The Bank Act guarantees that the members in each state are to be 
allocated a certain minimum number of Bank directorships. For most 
states, the Bank Act guarantees each state one directorship. Under the 
grandfather provision, however, 20 states are guaranteed a minimum 
number of seats that ranges from two to six directorships. See 12 CFR 
915.15. Those directorships cannot be eliminated, either by the Finance 
Board or as a result of shifting stock ownership among the members, nor 
can they be redesignated as representing members in another state. The 
proposed rule would define that core group of seats that must be 
allocated to each state as ``guaranteed directorships''. Ten of the 
Banks have eight guaranteed directorships each; the other two Banks, 
New York and San Francisco, have nine and five guaranteed 
directorships, respectively.
Non-Guaranteed Directorships
    The Bank Act also contemplates that certain states may be allocated 
directorships beyond the minimum number guaranteed by the Bank Act. The 
additional directorships result either from the amount of Bank stock 
held by the members located in a particular state or from the Finance 
Board's exercise of its authority to create discretionary directorships 
pursuant to Section 7(a) of the Bank Act. Those seats are not 
permanently allocated to a particular state and may be redesignated 
from year to year as representing members in another state; they also 
could be eliminated entirely. Most of the Banks have such directorships 
allocated to one or more states within their district, which the 
proposed rule would define as ``non-guaranteed directorships''. The 
proposed rule also would define the two distinct sub-groups of non-
guaranteed directorships as: (1) ``discretionary directorships,'' i.e., 
an elected or appointed directorship created by the Finance Board 
pursuant to Section 7(a) in districts with five or more states; and (2) 
``stock directorships,'' i.e., an elected directorship allocated to a 
state based on the amount of Bank stock held by the members located in 
that state, in addition to the minimum number of guaranteed 
directorships allocated to that state.

[[Page 17462]]

Staggering Process
    The GLB Act requires that the board of each Bank be staggered into 
three approximately equal classes. Based on that directive, the 
proposed rule would first divide the guaranteed directorships at each 
Bank into three groups that are as nearly equal as possible. For the 
ten Banks that each have eight guaranteed directorships, that would 
result in three classes with: two directors, three directors, and three 
directors, respectively. For the New York Bank, with nine guaranteed 
directorships, the result would be three classes, each with three 
directorships; for the San Francisco Bank, with five guaranteed 
directorships, there would be three classes with one, two, and two 
directorships, respectively. Accordingly, for eleven of the Banks the 
maximum number of guaranteed directorships that could be grouped into a 
single ``class'', i.e., a group of directorships with terms expiring on 
the same date, would be three; for the San Francisco Bank the maximum 
number would be two.
    The Finance Board considered attempting to establish a staggering 
methodology that could apply to the entire board of both appointed and 
elected directors, rather than the proposed method that focuses on the 
guaranteed directorships. Because of the differences between the two 
types of directors, i.e., the different manner of selection, the 
different interests represented, and the state-based restrictions that 
apply only to the elected directors, the Finance Board determined that 
the better approach would be to build the staggered board on the 
foundation of guaranteed directorships, with non-guaranteed 
directorships and appointed directorships being assigned adjusted 
terms, as necessary to result in the approximate one-third staggering 
required by the GLB Act.
    With regard to both the non-guaranteed and the appointed 
directorships, the terms would be adjusted only as necessary to achieve 
the appropriately staggered board. For example, eight of the Banks have 
six appointed directorships each. As the terms for the existing 
appointed directorships expire over the next two years, i.e., for the 
first post-GLB Act appointments, the Finance Board intends to adjust 
the terms of however many successor directorships are necessary to 
group the appointed directorships into three classes of two directors 
each. Because the three groups would be equal in number, there would be 
no effect on the staggering for the boards of those Banks. Similarly, 
with regard the other four Banks (three of which have eight appointed 
directorships and one of which has seven), the Finance Board intends to 
adjust the terms of those additional directorships as necessary to 
cause the entire board to be appropriately staggered. The Finance Board 
already has begun that process with the appointments for directorships 
commencing on January 1, 2000, and intends to follow the same approach 
with respect to the appointed directorships with terms commencing on 
January 1, 2001 and 2002, respectively.
    Based initially on the maximum number of guaranteed directorships 
that may be included in a single class, the Finance Board has created a 
matrix for each Bank that indicates how the existing classes of elected 
directorships would be divided in order to create three classes of 
directorships of approximately equal size. The proposed rule would 
require the board of directors of each Bank to adjust the terms of 
directorships that commence on January 1, 2001 and January 1, 2002 in 
accordance with the matrix for that Bank, as described below. Each 
matrix groups the directorships based on their current status, i.e., 
one group whose terms will commence on January 1, 2001, and a second 
group whose terms will commence on January 1, 2002. Within those two 
groups, the matrices indicate the states to which each directorship 
would be designated, the length of the term assigned to each 
directorship (commencing on January 1, 2001 or January 1, 2002, 
respectively), and whether the seat is ``non-guaranteed,'' i.e., either 
a discretionary directorship or a stock directorship. The matrices are 
based on the designation of directorships conducted in 1999, which is 
the most recent designation available. The matrices to be published in 
connection with the final rule would show the designation of 
directorships based on the amount of stock held by the members of each 
Bank as of December 31, 1999. The Finance Board also intends to provide 
updated matrices next year, in conjunction with the then-current 
designation of directorships.
    With regard to the directorships commencing on January 1, 2001, 
each matrix assigns, or requires the board of directors of the Bank to 
assign, a three-year term to three of the guaranteed directorships (two 
directorships, in the case of San Francisco), which is the maximum 
number of guaranteed directorships allowed for any one class of 
directors. Each of the remaining guaranteed directorships with terms 
commencing on January 1, 2001 is assigned a two-year term; those 
directorships would establish, at least in part, the third class of 
directorships required by the GLB Act. The matrix applies the same 
methodology to the class of guaranteed directorships with terms 
commencing on January 1, 2002, except that the shortened terms would be 
for one year, rather than for two years. The Finance Board believes 
that assigning the three-year terms to the maximum number of guaranteed 
directorships possible in any one class is consistent with the GLB Act, 
which authorizes the adjustment of the term of a directorship only as 
necessary to achieve the required one-third staggering of the board.
    For example, the Pittsburgh Bank has four guaranteed directorships 
with terms commencing on January 1, 2001. The matrix indicates that 
three of those seats--the maximum number of guaranteed directorships in 
any one class--are to have the full three-year term and the one 
remaining directorship is to have a two-year term. The Pittsburgh Bank 
also has four other guaranteed directorship with terms commencing on 
January 1, 2002. Again, the matrix indicates that three of those 
seats--the maximum number of guaranteed directorships per class--
receive a full three-year term, with the fourth directorship receiving 
a one year term. As a result, the Bank would achieve the required ``2-
3-3'' staggering of its guaranteed directorships by adjusting the terms 
of only two of the eight guaranteed directorships. Thus, the Bank would 
have one class of two directorships with terms expiring on December 31, 
2002, one class of three directorships with terms expiring on December 
31, 2003, and one class of three directorships with terms expiring on 
December 31, 2004. Though not indicated on the matrix, the Finance 
Board would adjust the terms of the appointed directorships for the 
Pittsburgh Bank as necessary to create three classes of two directors 
each, which would result in the entire board being grouped into classes 
of ``4-5-5'', which is the closest to the one-third staggering that can 
be achieved with a fourteen director board.
    The matrix for the Pittsburgh Bank also illustrates the different 
methods by which a directorship is to be assigned a shortened term, one 
of which is based on the votes cast by the members and the other of 
which is based on the number of states with directorships at issue. In 
the case of the four directorships commencing on January 1, 2001, each 
directorship is designated as representing the members located in

[[Page 17463]]

Pennsylvania. In such a case, i.e., where a reduced term must be 
assigned to one of several directorships from the same state, the 
proposed rule requires that the assignment be based on the number of 
votes each director-elect receives in the most recent election. Thus, 
in the class of directorships commencing on January 1, 2001, the 
director-elect from Pennsylvania who receives the fourth most votes 
would be assigned to the two-year term. The same methodology would 
apply whenever a choice must be made between two or more directorships 
from the same state, whether the issue is which seat is to receive a 
reduced term or which seat is to be designated as a ``non-guaranteed'' 
directorship.
    The methodology for assigning the one reduced term among the 
directorships with terms commencing on January 1, 2002, however, would 
differ somewhat from that used for the prior class. In this case, three 
of the four guaranteed directorships at issue would be from different 
states: West Virginia, Delaware, and Pennsylvania (which has two 
guaranteed directorships in this class). Here, again, no more than 
three of the guaranteed directorships may be assigned a full three-year 
term, and one must receive a reduced term, which in this case would be 
for one year. Where the number of states is the same as the number of 
full-term directorships available, as is the case here, the matrix 
assigns one full term to each state. The matrices reflect a 
determination by the Finance Board that to the extent possible each 
state should be treated equally in the assignment of three-year terms. 
For that reason, the matrix does not allow both Pennsylvania 
directorships to receive a full term, as that could not occur unless 
one of the remaining states--Delaware or West Virginia--were to receive 
the one-year term. With regard to the two Pennsylvania directorships, 
the board of directors of the Bank would be required to assign the one-
year term to the director-elect from Pennsylvania who receives the 
second highest number of votes, as described in the preceding 
paragraph.
    For certain other Banks, the methods used for the Pittsburgh Bank 
would not work because the number of states with guaranteed 
directorships would be greater than the number of three-year terms that 
are available. In that case, the proposed rule would require the board 
of directors of the Bank to assign the full three-year terms and the 
reduced terms among the guaranteed directorships from the different 
states; i.e., the three full three-year terms would be allocated among 
four or five states. Where several states are involved, each 
directorship has a different constituency and thus the number of votes 
received by each candidate cannot be used to rank them. Also, because 
the number of states with guaranteed directorships is greater than the 
number of three-year terms available, not all of the states can be 
treated equally, as was the case with the Pittsburgh Bank. Where equal 
treatment for all states would not be possible, the Finance Board 
believes that it would be most appropriate, as well as consistent with 
the GLB Act, for the board of directors of each Bank to make the 
determination as to which states' directorships should be assigned the 
reduced term. The matrices reflect that provision, noting that the 
board of the Bank would be required to select one (and in some cases, 
two) states that would receive a reduced term. (As noted earlier, the 
boards must make this decision before determining the effect to be 
given to the 1999 election results.)
    For example, the Atlanta Bank has four guaranteed directorships, 
representing the members in the District of Columbia, Alabama, 
Virginia, and South Carolina, with terms commencing on January 1, 2001. 
Only three of those seats may receive a full three-year term; the 
remaining directorship must receive a two-year term in order to comply 
with the staggering requirement. In this case, the matrix indicates 
that the board of the Atlanta Bank must decide which of those four 
directorships is to be assigned a two-year term. The proposed rule 
provides that the manner in which the board of directors assigns the 
reduced term to a particular state is entirely within its discretion, 
so long as the method is reasonable and is used consistently. Thus, the 
rule would allow the board to adopt some objective basis for making the 
determination or to assign the terms randomly, such as through a 
lottery among the affected states.
    The Finance Board recognizes that certain directors may have an 
interest in which state's directorship is to be assigned a reduced 
term, but has not proposed to require that the decision be made only by 
the disinterested directors. In any case, the individuals who may be at 
risk of having their next term (or the term of their successors) 
reduced will likely be a minority not only of the elected directors but 
of the whole board as well. Moreover, all of the appointed directors, 
who are disinterested in these matters, must be involved in these 
determinations. The Finance Board believes that those factors, along 
with the fiduciary duties of all directors to act in the best interests 
of the Bank, are sufficient safeguards for the process. Nonetheless, 
the Finance Board requests comment on whether it would be advisable to 
require such determinations be made only by the disinterested 
directors, or to include a ``safe harbor'' proviso in the final rule 
that would allow an interested director, i.e., a director whose 
directorship may be at risk of being assigned a reduced term, to 
participate in the decision without being deemed to violate the 
conflict of interest regulations or the conflict policies of the Bank.
    For some Banks neither of the above scenarios will apply because 
the guaranteed directorships will consist in part of directorships 
representing different states and in part of multiple directorships 
from the same state; i.e., there are two or more states with guaranteed 
directorships at issue, and one or more of those states has more than 
one directorship open. For example, the Boston Bank has five guaranteed 
directorships with terms commencing on January 1, 2001: two are 
designated to Massachusetts, and one each is designated to Connecticut, 
Rhode Island, and Maine. There also is one non-guaranteed directorship 
open, which is a stock seat allocated to Connecticut. Because there are 
three three-year terms to be allocated among four states, the board of 
directors of the Bank first must determine which one of the four states 
is to receive the two-year term, as described above with regard to the 
Atlanta Bank. After doing so, the board then would make any necessary 
distinctions between directorships from the same state on the basis of 
the votes received, as in the case of the Pittsburgh Bank. Thus, 
assuming that the board had assigned one of the three-year terms to one 
of the two Massachusetts directorships, the board would assign the 
Massachusetts director-elect who received the most votes to the three-
year term. The other guaranteed directorship from Massachusetts would 
be assigned to the director-elect who received the second highest 
number of votes. Similarly, the matrix indicates that one of the 
Connecticut directorships is to be a ``non-guaranteed'' directorship, 
while the other is to be a ``guaranteed'' directorship. The proposed 
rule would require the board of the Boston Bank to assign the non-
guaranteed directorship to the Connecticut director-elect who received 
the second highest number of votes in the election; the Connecticut 
director-elect who received the most votes then would be assigned to 
the ``guaranteed'' directorship.
    With regard to the non-guaranteed directorships, the proposed rule 
also would provide that once a directorship is designated as non-
guaranteed it

[[Page 17464]]

would retain that status in all subsequent elections unless it is 
eliminated by the Finance Board (in the case of a discretionary 
directorship) or as a consequence of a shift in the relative amounts of 
Bank stock held by members in different states. If, in connection with 
a subsequent annual designation of directorships, a directorship 
allocated to a particular state were to be eliminated or redesignated 
as representing the members in another state, the non-guaranteed 
directorship from that state would be the directorship that would have 
to be eliminated or redesignated.
    With regard to the non-guaranteed directorships, the matrices have 
assigned terms to those directorships in a manner that is consistent 
with the one-third staggering requirement of the GLB Act, as noted 
previously. For example, the two non-guaranteed directorships at the 
Boston Bank have been assigned two- and one-year terms, respectively, 
which both places them into the same class of directors and results in 
a ``4-3-3'' class structure, which is consistent with the GLB Act. In 
the event that one or both of those directorships were to be 
eliminated, the elected directorships would be grouped either into a 
``3-3-3'' class structure or the ``2-3-3'' structure of the guaranteed 
directorships, thus maintaining the one-third staggering of the board.
Eligibility of Directors
    The proposed rule also would amend provisions regarding the 
eligibility of directors to remain in office if the directorship to 
which they have been elected is redesignated as representing members in 
another state or is eliminated. As noted above, it is possible that 
shifting stock ownership among the members in different states could 
cause the designation of a directorship to change during the course of 
an incumbent's term of office, or for the seat to disappear. The 
proposed rule would provide that an elected director becomes ineligible 
to remain in office if the directorship is designated to another state 
during that director's term of office or if the directorship is 
eliminated. The loss of eligibility would take effect on December 31 of 
the year in which the redesignation occurs.
    In the case of a redesignation to another state, the directorship 
would become vacant and the board of directors of the Bank would fill 
the vacant directorship for the remainder of the unexpired term in 
accordance with Section 7(f) of the Bank Act with an officer or 
director of a member located in the newly-designated state. The 
proposed rule would make a similar change to the provisions regarding 
appointed directors, providing that if an appointed directorship that 
has been created in conjunction with the creation of additional elected 
directorships in accordance with Section 7(a) of the Bank Act the term 
of office of the appointed director would terminate on December 31 of 
the year in which the directorship is terminated.
Conforming Amendments
    The proposed rule also includes a number of conforming amendments 
to other provisions of the regulations to remove references that no 
longer are accurate in light of the GLB Act and to be consistent with 
the other elements of the proposed rule.

IV. Regulatory Flexibility Act

    The proposed rule would apply only to the Finance Board and to the 
Federal Home Loan Banks, which do not come within the meaning of small 
entities as defined in the Regulatory Flexibility Act (RFA). See 5 
U.S.C. 601(6). Thus, in accordance with section 605(b) of the RFA, 5 
U.S.C. 605(b), the Finance Board hereby certifies that the proposed 
rule, if promulgated as a final rule, will not have a significant 
impact on a substantial number of small entities.

V. Paperwork Reduction Act

    The proposed rule does not contain any collections of information 
pursuant to the Paperwork Reduction Act of 1995. See 44 U.S.C. 3501 et 
seq. Therefore, the Finance Board has not submitted any information to 
the Office of Management and Budget for review.

List of Subjects in 12 CFR Part 915

    Banks, banking, Conflict of interests, Elections, Ethical conduct, 
Federal home loan banks, Financial disclosure, Reporting and 
recordkeeping requirements.
    Accordingly, the Federal Housing Finance Board hereby amends title 
12, chapter IX, part 915 of the Code of Federal Regulations, as 
follows:

PART 915--DIRECTORS, OFFICERS, AND EMPLOYEES OF THE BANKS

    1. The authority citation for part 915 continues to read as 
follows:

    Authority: 12 U.S.C. 1422a(a)(3), 1422b(a), 1426, 1427, and 
1432.

    2. Amend Sec. 915.1 by revising the second paragraph of the 
definition of ``bona fide resident of a Bank district'' and by adding 
in alphabetical order definitions of ``discretionary directorship'', 
``guaranteed directorship'', ``non-guaranteed directorship'', and 
``stock directorship'' to read as follows:


Sec. 915.1  Definitions.

* * * * *
    Bona fide resident of a Bank district means an individual who:
* * * * *
    (2) If serving as an elective director, is an officer or director 
of a member located in a voting state within the Bank district; or
* * * * *
    Discretionary directorship means an elected or appointed 
directorship created by the Finance Board pursuant to Section 7(a) of 
the Act for districts that include five or more states.
    Guaranteed directorship means a directorship that is required by 
Section 7(a) of the Act and Sec. 915.15 to be designated as 
representing Bank members that are located in a particular state.
    Non-guaranteed directorship means an elected directorship that is 
either a discretionary directorship or a stock directorship.
    Stock directorship means an elected directorship that is designated 
by the Finance Board as representing the members located in a 
particular state based on the amount of Bank stock held by the members 
in that state, and which is in excess of the number of guaranteed 
directorships allocated to that state.
    3. Amend Sec. 915.3 by:
    a. Revising the fourth sentence of paragraph (a);
    b. Adding a new sentence at the end of paragraph (b)(5);
    c. Revising the second sentence in paragraph (c); and
    d. Removing paragraph (e) to read as follows:


Sec. 915.3  Director elections.

    (a) * * * The term of office of each elective director shall be 
three years, except as adjusted pursuant to Section 7(d) of the Act and 
Sec. 915.17 of this chapter to achieve a staggered board, and shall 
commence on January 1 of the calendar year immediately following the 
year in which the election is held. * * *
    (b) * * *
    (5) * * * If, as part of the annual designation of directorships, 
the Finance Board eliminates or redesignates to another state an 
existing discretionary directorship, the term of the directors 
appointed or elected to the eliminated or redesignated directorship 
shall terminate on the immediately following December 31.
    (c) * * * If the annual designation of elective directorships 
results in an existing directorship being redesignated

[[Page 17465]]

as representing members in a different state, the notice also shall 
state that the directorship must be filled by an officer or director of 
a member located in the newly designated state as of January 1 of the 
immediately following year, regardless of whether the term for the 
incumbent director would have expired by that date.
* * * * *
    4. Amend Sec. 915.7, by adding a new paragraph (d), to read as 
follows:


Sec. 915.7  Eligibility requirements for elective directors.

* * * * *
    (d) Loss of eligibility. (1) An elected director shall become 
ineligible to remain in office if, during his or her term of office, 
the directorship to which he or she has been elected is eliminated or 
is redesignated by the Finance Board as representing members located in 
another state, in accordance with Sec. 915.3(b). The incumbent director 
shall become ineligible on December 31 of the year in which the 
directorship is redesignated or eliminated.
    (2) In the case of a redesignation to another state, the 
directorship shall become vacant on December 31 of the year in which 
the directorship is redesignated and the resulting vacancy shall be 
filled by the board of directors of the Bank for the remainder of the 
unexpired term with a person who is an officer or director of a member 
located in the newly designated state, pursuant to Section 7(f) of the 
Bank Act.
    5. Amend Sec. 915.10, by revising paragraph (b), to read as 
follows:


Sec. 915.10  Selection of appointive directors.

* * * * *
    (b) Term of office. The term of office of each appointive 
directorship shall be three years, except as adjusted pursuant to 
Section 7(d) of the Act to achieve a staggered board, and shall 
commence on January 1. In appointing directors for the terms commencing 
on January 1, 2001 and 2002, respectively, the Finance Board shall 
adjust the terms of any appointed directorships as necessary to achieve 
the one-third staggering of the board of directors required by Section 
7(d) of the Act, in accordance with the requirements of this Part and 
the applicable matrix from the Appendix to this Part. In the case of an 
appointive directorship that is terminated pursuant to 
Sec. 915.3(b)(5), the term of office of the directorship shall end on 
December 31 of that year.
    6. Add new Sec. 915.16 to read as follows:


Sec. 915.16  1999 and 2000 Election of Directors.

    (a) In general. If the annual designation of Bank directorships 
conducted by the Finance Board pursuant to Sec. 915.3(b) for the terms 
commencing on January 1, 2001 differs from the designation conducted 
for the terms that were to have commenced on January 1, 2000, the 
former shall control. If for any election the board of directors of a 
Bank is required by Sec. 915.17(a)(3) to assign a shortened term to one 
or more directorships from different states, the board shall do so 
before determining under paragraph (b) of this section whether to adopt 
the 1999 election results or to hold new elections in 2000.
    (b) Conduct of 2000 elections. After receipt of the designation of 
directorships conducted by the Finance Board for directorships with 
terms commencing on January 1, 2001, the board of directors of each 
Bank shall determine either:
    (1) To conduct new elections for every state in the district for 
which an elected directorship is to commence on January 1, 2001, or
    (2) To conduct new elections only in those states for which this 
section requires a new election to be held and, for all other states 
within the district, to use the results of the 1999 elections, for the 
purpose of electing directors whose terms are to commence on January 1, 
2001.
    (c) 1999 election results. If the number of nominees from any state 
for the 1999 election of directors equals or exceeds the number of 
directorships designated to that state for terms commencing on January 
1, 2001, the board of directors of the Bank may declare elected the 
nominee receiving the most votes in the 1999 election and, if more than 
one directorship is to be filled for that state, shall also declare 
elected each successive nominee receiving the next greatest number of 
votes, until all directorships designated for that state are filled. 
Before declaring elected any such nominee, the board of directors of 
the Bank shall confirm that the nominee is eligible to serve as a 
director from that state.
    (d) 2000 elections. If the number of directorships designated for 
any state by the Finance Board for terms commencing on January 1, 2001, 
exceeds the number of that state's nominees from the 1999 election who 
remain eligible to serve as a Bank director, then the board of 
directors of the Bank shall conduct a new election for that state for 
all of the directorships that have terms commencing on January 1, 2001.
    (e) Report of election. If the board of directors of a Bank adopts 
the 1999 election results for any state, it shall provide written 
notice of its decision to the Finance Board, the directors-elect, and 
to each member in the affected state. The notice shall indicate the 
date on which the term of office of each director-elect shall expire, 
and shall indicate which terms have been adjusted in order to stagger 
the board of directors as required by Section 7(d) of the Bank Act. Any 
such adjustments shall be made in compliance with Sec. 915.17. Such 
notice shall be deemed to constitute the report of election for the 
2000 election required by Sec. 915.8(e).
    7. Add new Sec. 915.17 to read as follows:


Sec. 915.17  Staggered directorships in the 2000 and 2001 elections.

    (a) In general. (1) In conjunction with the annual designation of 
directorships for directors with terms commencing on January 1, 2001 
and January 1, 2002, the Finance Board shall, in addition to allocating 
directorships among the states, indicate the term of each directorship 
and which directorships are to be designated as non-guaranteed 
directorships. A non-guaranteed directorship shall retain that 
designation in all subsequent elections, unless the directorship is 
eliminated by the Finance Board pursuant to Section 7(a) of the Bank 
Act or as a consequence of a change in the amount of Bank stock held by 
members located in that state.
    (2) The board of directors of each Bank shall adjust the terms of 
any directorships that are to commence on January 1, 2001 or January 1, 
2002, in accordance with this section and the matrix for that Bank set 
forth in the Appendix to this part.
    (3) Where the matrix for a Bank indicates that two or more 
guaranteed directorships are to be filled by persons elected from 
different states in the same year, and which are to have different 
terms, the board of directors of the Bank shall assign the shorter 
terms among the states on any reasonable basis, as determined by Bank's 
board, provided that:
    (i) It uses the same methodology in making all such adjustments; 
and
    (ii) It assigns the terms to the respective states before 
determining whether to adopt the 1999 election results, in accordance 
with Sec. 915.16(b).
    (b) Adjustment of terms. (1) Where the matrix for a Bank indicates 
that two or more guaranteed directorships are to be filled from the 
same state in the same year, but which are to have different terms, the 
board of directors of the Bank shall assign the terms, among the

[[Page 17466]]

eligible nominees who have received a sufficient number of votes to be 
elected, such that the nominees receiving the greater number of votes 
are assigned the longer terms and those nominees receiving the lesser 
number of votes are assigned the shorter terms.
    (2) In the elections occurring in 2000 and 2001, if the matrix for 
any Bank indicates that both guaranteed and non-guaranteed 
directorships are to be filled from the same state in the same year, 
the board of directors shall assign directorships, among the eligible 
nominees who have received a sufficient number of votes to be elected, 
such that the nominees receiving the greatest number of votes are 
assigned the guaranteed directorships and those nominees receiving the 
fewest votes are assigned the non-guaranteed directorships.
    (c) Other adjustments. The board of directors of the Bank may not 
adjust the term of any director other than as provided in this section.
    8. Add a new appendix to part 915 to read as follows:

Appendix to Part 915--Staggering For FHL Bank Boards of Directors

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
           Boston FHLBank                     Term           Non- guaranteed  seats   3  Total staggering: 4-3-3
 
----------------------------------------------------------------------------------------------------------------
 10 Seats: 8 Guaranteed by Statute
        and 2 Not Guaranteed
 
    6 Seats to be filled in 2000
              Election
                                     *Board must allocate 1
                                      Seat to a 2-year term.
    Mass. Seat.....................  3/2 Years*............
    Conn. Seat.....................  3/2 Years*............
    Maine Seat.....................  3/2 Years*............
    R. I. Seat.....................  3/2 Years*............
 
    Mass. Seat.....................  2 Years...............
    Conn. Seat.....................  2 Years...............  Not Guaranteed (Stock
                                                              seat).
 
    4 Seats to be filled in 2001
              Election
 
    Mass. Seat.....................  3 Years...............
    N.H. Seat......................  3 Years...............
    Vermont Seat...................  3 Years...............
 
    Mass. Seat.....................  1 Year................  Not Guaranteed
                                                              (Discretionary Seat).
----------------------------------------------------------------------------------------------------------------

Class with Terms Expiring Dec. 31, 2002 (4 seats)
    Mass./Conn./Maine/Rhode Island Seat (board to pick 1 of 4)
    Mass. Seat
    Conn. Seat (not guaranteed by statute)
    Mass. Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats)
    Mass./Conn./Maine/Rhode Island Seat (board to pick 3 of 4)
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    Mass. Seat
    N.H. Seat
    Vermont Seat

                                                     Table 2
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 3-3-
            N.Y. FHLBank                      Term           Non- guaranteed  seats   3  Total staggering: 3-4-4
 
----------------------------------------------------------------------------------------------------------------
 11 Seats: 9 Guaranteed by Statute
        and 2 Not Guaranteed
 
    7 Seats to be filled in 2000
              election
 
    New York Seat..................  3 Years...............
    New Jersey Seat................  3 Years...............
    Puerto Rico Seat...............  3 Years...............
    New York Seat..................  3 Years...............  Not Guaranteed (Stock
                                                              Seat).
 
    New York Seat..................  2 Years...............
    New York Seat..................  2 Years...............
    New Jersey Seat................  2 Years...............
 
    4 Seats to be filled in 2001
              election
 
    New York Seat..................  3 Years...............
    New York Seat..................  3 Years...............  Not Guaranteed (Stock
                                                              Seat).
    New Jersey Seat................  3 Years...............
    New Jersey Seat................  3 Years...............
----------------------------------------------------------------------------------------------------------------



[[Page 17467]]

Class with Terms Expiring Dec. 31, 2002 (3 seats)
    New York Seat
    New York Seat
    New Jersey Seat
Class with Terms Expiring Dec. 31, 2003 (4 seats)
    New York Seat
    New York Seat (not guaranteed by statute)
    New Jersey Seat
    Puerto Rico Seat
Class with Terms Expiring Dec. 31, 2004 (4 seats)
    New York Seat
    New York Seat (not guaranteed by statute)
    New Jersey Seat
    New Jersey Seat


                                                     Table 3
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
           Pitts. FHLBank                     Term              Non-  guaranteed      3  Total staggering: 2-3-3
                                                                      seats
----------------------------------------------------------------------------------------------------------------
 8 Seats: All Guaranteed by Statute
 
    4 Seats to be filled in 2000
              Election
 
    Penn. Seat.....................  3 Years...............
    Penn. Seat.....................  3 Years...............
    Penn. Seat.....................  3 Years...............
 
    Penn. Seat.....................  2 Years...............
 
    4 Seats to be filled in 2001
              Election
 
    West Va. Seat..................  3 Years...............
    Delaware Seat..................  3 Years...............
    Penn. Seat.....................  3 Years...............
 
    Penn. Seat.....................  1 Year................
----------------------------------------------------------------------------------------------------------------


Class with Terms Expiring Dec. 31, 2002 (2 seats)
    Penn. Seat
    Penn Seat
Class with Terms Expiring Dec. 31, 2003 (3 seats)
    Penn. Seat
    Penn. Seat
    Penn. Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    Penn. Seat
    Delaware Seat
    West Va. Seat


                                                     Table 4
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
          Atlanta FHLBank                     Term           Non- guaranteed  seats   3  Total staggering: 3-3-3
 
----------------------------------------------------------------------------------------------------------------
  9 Seats: 8 Guaranteed by Statute
        and 1 Not Guaranteed
 
    4 Seats to be filled in 2000
              Election
                                     *Board must allocate 1
                                      Seat to a 2-year term.
    D.C. Seat......................  3/2 Years*............
    Alabama Seat...................  3/2 Years*............
    Virginia Seat..................  3/2 Years*............
    S. Carolina Seat...............  3/2 Years*............
 
    5 Seats to be filled in 2001
              Election
                                     *Board must allocate 1
                                      Seat to a 1-year term.
    N. Carolina Seat...............  3/1 Years*............
    Georgia Seat...................  3/1 Years*............
    Maryland Seat..................  3/1 Years*............
    Florida Seat...................  3/1 Years*............
    N. Carolina Seat...............  1 Year................  Not Guaranteed
                                                               (Discretionary Seat)
----------------------------------------------------------------------------------------------------------------

Class with Terms Expiring Dec. 31, 2002 (3 seats)
    North Carolina Seat (not guaranteed by statute)
    D.C./Alabama/Virginia/So. Carolina Seat (board to pick 1 of 4)
    No. Carolina/Georgia/Maryland/Florida Seat (board to pick 1 of 
4)
    Class with Terms Expiring Dec. 31, 2003 (3 seats)
    D.C./Alabama/Virginia/So. Carolina Seat (board to pick 3 of 4)
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    No. Carolina/Georgia/Maryland/Florida Seat (board to pick 3 of 
4)

[[Page 17468]]



                                                     Table 5
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
         Cincinnati FHLBank                   Term           Non- guaranteed  seats   3  Total staggering: 3-3-3
 
----------------------------------------------------------------------------------------------------------------
  9 Seats: 8 Guaranteed by Statute
        and 1 Not Guaranteed
 
    4 Seats to be filled in 2000
              Election
                                     *Board must allocate 1
                                      Seat to a 2-year term.
    Kentucky Seat..................  3 Years...............
    Ohio Seat......................  3 Years...............
 
    Kentucky Seat..................  3/2 Years*............
    Ohio Seat......................  3/2 Years*............
 
    5 Seats to be filled in 2001
              Election
                                     *Board must allocate 1
                                      Seat to a 1-year term.
    Ohio Seat......................  3 Years...............
    Tennessee Seat.................  3 Years...............
 
    Tennessee Seat.................  3/1 Years*............
    Ohio Seat......................  3/1 Years*............
 
    Ohio Seat......................  1 Year................  Not Guaranteed (Stock
                                                              Seat).
----------------------------------------------------------------------------------------------------------------


Class with Terms Expiring Dec. 31, 2002 (3 seats)
    Kentucky or Ohio Seat (board to decide)
    Ohio Seat (not guaranteed by statute)
    Tennessee or Ohio Seat (board to decide)
Class with Terms Expiring Dec. 31, 2003 (3 seats)
    Kentucky Seat
    Ohio Seat
    Kentucky or Ohio Seat (board to decide)
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    Ohio Seat
    Tennessee Seat
    Tennessee or Ohio Seat (board to decide)

                                                     Table 6
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
        Indianapolis FHLBank                  Term           Non- guaranteed  seats   3  Total staggering: 4-3-3
 
----------------------------------------------------------------------------------------------------------------
 10 Seats: 8 Guaranteed by Statute
        and 2 Not Guaranteed
 
    4 Seats to be filled in 2000
              Election
 
    Indiana Seat...................  3 Years...............
    Indiana Seat...................  3 Years...............
    Michigan Seat..................  3 Years...............
 
    Indiana Seat...................  2 Years...............
 
    6 Seats to be filled in 2001
              Election
                                     *Board must allocate 1
                                      Seat to a 1-year term.
    Michigan Seat..................  3 Years...............
    Indiana Seat...................  3 Years...............
 
    Michigan Seat..................  3/1 Years*............
    Indiana Seat...................  3/1 Years*............
 
    Michigan Seat..................  1 Year................  Not Guaranteed (Stock
                                                              Seat).
    Michigan Seat..................  1 Year................  Not Guaranteed (Stock
                                                              Seat).
----------------------------------------------------------------------------------------------------------------


Class with Terms Expiring Dec. 31, 2002 (4 seats)
    Indiana Seat
    Michigan or Indiana Seat (board to decide)
    Michigan Seat (not guaranteed by statute)
    Michigan Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats)
    Indiana Seat
    Indiana Seat
    Michigan Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    Michigan Seat
    Indiana Seat
    Michigan or Indiana Seat (board to decide)


[[Page 17469]]



                                                     Table 7
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
          Chicago FHLBank                     Term            Non- guaranteed seats   3  Total staggering: 4-3-3
 
----------------------------------------------------------------------------------------------------------------
 10 Seats: 8 Guaranteed by Statute
        and 2 Not Guaranteed
 
    4 Seats to be filled in 2000
              Election
 
    Illinois Seat..................  3 Years...............
    Wisconsin Seat.................  3 Years...............
    Wisconsin Seat.................  3 Years...............
 
    Wisconsin Seat.................  2 Years...............
 
    6 Seats to be filled in 2001
              Election
 
    Wisconsin Seat.................  3 Years...............
    Illinois Seat..................  3 Years...............
    Illinois Seat..................  3 Years...............
 
    Illinois Seat..................  1 Year................
    Illinois Seat..................  1 Year................  Not Guaranteed (Stock
                                                              Seat).
    Illinois Seat..................  1 Year................  Not Guaranteed (Stock
                                                              Seat).
----------------------------------------------------------------------------------------------------------------

Class with Terms Expiring Dec. 31, 2002 (4 seats)
    Wisconsin Seat
    Illinois Seat
    Illinois Seat (not guaranteed by statute)
    Illinois Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats) 
    Illinois Seat
    Wisconsin Seat
    Wisconsin Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats) 
    Wisconsin Seat
    Illinois Seat
    Illinois Seat

                                                     Table 8
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
          Des Moines Bank                     Term            Non- guaranteed seats   3  Total staggering: 4-3-3
 
----------------------------------------------------------------------------------------------------------------
 10 Seats: 8 Guaranteed by Statute
        and 2 Not Guaranteed
 
    6 Seats to be filled in 2000
              Election
                                     *Board must allocate 1
                                      Seat to a 2-year term.
    Missouri Seat..................  3/2 Years*............
    South Dakota Seat..............  3/2 Years*............
    Iowa Seat......................  3/2 Years*............
    Minnesota Seat.................  3/2 Years*............
 
    Iowa Seat......................  2 Years...............
    Minnesota Seat.................  2 Years...............  Not Guaranteed (Stock
                                                              Seat).
 
    4 Seats to be filled in 2001
              Election
 
    Missouri Seat..................  3 Years...............
    Minnesota Seat.................  3 Years...............
    North Dakota Seat..............  3 Years...............
    Missouri Seat..................  1 Year................  Not Guaranteed
                                                              (Discretionary Seat).
----------------------------------------------------------------------------------------------------------------

Class with Terms Expiring Dec. 31, 2002 (4 seats) 
    Iowa Seat
    Missouri/So. Dakota/Iowa/Minnesota Seat (board to pick 1 of 4)
    Minnesota Seat (not guaranteed by statute)
    Missouri Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats) 
    Missouri/So. Dakota/Iowa/Minnesota Seat (board to pick 3 of 4)
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    Missouri Seat
    Minnesota Seat
    North Dakota Seat

[[Page 17470]]



                                                     Table 9
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
           Dallas FHLBank                     Term           Non- guaranteed  seats   3  Total staggering: 3-3-3
 
----------------------------------------------------------------------------------------------------------------
  9 Seats: 8 Guaranteed by Statute
        and 1 Not Guaranteed
 
    4 Seats to be filled in 2000
              Election
 
    Texas Seat.....................  3 Years...............
    Louisiana Seat.................  3 Years...............
    Arkansas Seat..................  3 Years...............
    Louisiana Seat.................  2 Years...............
 
    5 Seats to be filled in 2001
              Election
 
    Texas Seat.....................  3 Years...............
    Mississippi Seat...............  3 Years...............
    New Mexico Seat................  3 Years...............
 
    Texas Seat.....................  1 Year................
    Texas Seat.....................  1 Year................  Not Guaranteed (Stock
                                                              Seat).
----------------------------------------------------------------------------------------------------------------

Class with Terms Expiring Dec. 31, 2002 (3 seats)
    Louisiana Seat
    Texas Seat
    Texas Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats)
    Texas Seat
    Louisiana Seat
    Arkansas Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    Texas Seat
    Mississippi Seat
    New Mexico Seat

                                                     Table 10
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
           Topeka FHLBank                     Term            Non- guaranteed seats   3  Total staggering: 2-3-3
 
----------------------------------------------------------------------------------------------------------------
 10 Seats: 8 Guaranteed by Statute
        and 2 Not Guaranteed
 
    5 Seats to be filled in 2000
              Election
 
    Colorado Seat..................  3 Years...............
    Oklahoma Seat..................  3 Years...............
    Kansas Seat....................  3 Years...............
    Colorado Seat..................  2 Years...............
    Kansas Seat....................  2 Years...............
 
    5 Seats to be filled in 2001
              Election
 
    Kansas Seat....................  3 Years...............
    Oklahoma Seat..................  3 Years...............
    Nebraska Seat..................  3 Years...............
 
    Nebraska Seat..................  1 Year................  Not Guaranteed (Stock
                                                              Seat).
    Oklahoma Seat..................  1 Year................  Not Guaranteed (Stock
                                                              Seat).
----------------------------------------------------------------------------------------------------------------

Class with Terms Expiring Dec. 31, 2002 (4 seats)
    Colorado Seat
    Kansas Seat
    Nebraska Seat (not guaranteed by statute)
    Oklahoma Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats)
    Colorado Seat
    Oklahoma Seat
    Kansas Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    Kansas Seat
    Oklahoma Seat
    Nebraska Seat

                                                    Table 11
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 1-2-
       San Francisco FHLBank                  Terms          Non- guaranteed  seats   2  Total staggering: 2-3-3
 
----------------------------------------------------------------------------------------------------------------
  8 Seats: 5 Guaranteed by Statute
        and 3 Not Guaranteed
 
    4 Seats to be filled in 2000
              Election
 

[[Page 17471]]

 
    California Seat................  3 Years...............
    California Seat................  3 Years...............
    California Seat................  3 Years...............  Not Guaranteed (Stock
                                                              Seat).
    California Seat................  2 Years...............  Not Guaranteed (Stock
                                                              Seat).
    4 Seats to be filled in 2001
              Election
                                     *Board must allocate 1
                                      seat to a 1-year term.
    California Seat................  3/1 Years*............
    Nevada Seat....................  3/1 Years*............
    Arizona Seat...................  3/1 Years*............
    California Seat................  1 Year................  Not Guaranteed (Stock
                                                              Seat).
----------------------------------------------------------------------------------------------------------------

Class with Terms Expiring Dec. 31, 2002 (3 seats)
    California/Nevada/Arizona Seat (board to pick 1 of 3)
    California Seat (not guaranteed by statute)
    California Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats)
    California Seat
    California Seat
    California Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2004 (2 seats)
    California/Nevada/Arizona Seat (board to pick 2 of 3)

                                                    Table 12
----------------------------------------------------------------------------------------------------------------
                                                                                     Guaranteed staggering: 2-3-
          Seattle FHLBank                     Term              Non-  guaranteed      3  Total staggering: 4-3-3
                                                                      seats
----------------------------------------------------------------------------------------------------------------
 10 Seats: 8 Guaranteed by Statute
        and 2 Not Guaranteed
 
    5 Seats to be filled in 2000
              Election
 
    Hawaii Seat....................  3 Years...............
    Utah Seat......................  3 Years...............
    Alaska Seat....................  3 Years...............
 
    Washington Seat................  2 Years...............  Not Guaranteed
                                                               (Discretionary Seat)
    Washington Seat................  2 Years...............  Not Guaranteed
                                                               (Discretionary Seat)
 
    5 Seats to be filled in 2001
              Election
                                     * Board must allocate
                                      2 seats to 1-year
                                      terms.
    Montana Seat...................  3/1 Years*............
    Oregon Seat....................  3/1 Years*............
    Washington Seat................  3/1 Years*............
    Idaho Seat.....................  3/1 Years*............
    Wyoming Seat...................  3/1 Years*............
----------------------------------------------------------------------------------------------------------------

Class with Terms Expiring Dec. 31, 2002 (4 seats)
    Montana/Oregon/Idaho/Wyoming/Washington Seat (board to pick 2 of 
5)
    Washington Seat (not guaranteed by statute)
    Washington Seat (not guaranteed by statute)
Class with Terms Expiring Dec. 31, 2003 (3 seats)
    Hawaii Seat
    Utah Seat
    Alaska Seat
Class with Terms Expiring Dec. 31, 2004 (3 seats)
    Montana/Oregon/Idaho/Wyoming/Washington Seat (board to pick 3 of 
5)

    Dated: February 23, 2000.

    By the Board of Directors of the Federal Housing Finance Board.
Bruce A. Morrison,
Chairman.
[FR Doc. 00-8052 Filed 3-31-00; 8:45 am]
BILLING CODE 6725-01-P